nep-ino New Economics Papers
on Innovation
Issue of 2011‒08‒02
eight papers chosen by
Steffen Lippert
University of Otago, Dunedin

  1. Computational Results on Membership in R&D Cooperation Networks: To Be or Not To Be in a Research Joint Venture By Duarte Leite; Pedro Campos; Isabel Mota
  2. Education, vocational training and R&D: towards new forms of labor market regulation By Lopes, Margarida
  3. Intellectual Property Rights, Migration, and Diaspora By A. Naghavi; C. Strozzi
  4. Drug Innovations and Welfare Measures Computed from Market Demand: The Case of Anti-Cholesterol Drugs By Abe Dunn
  5. International Sourcing, Product Complexity and Intellectual Property Rights By A. Naghavi; J. Spies; F. Toubal
  6. Smart specialisation, regional growth and applications to EU cohesion policy By Philip McCann; Raquel Ortega-Argilés
  7. Parting with "Blue Monday" – Preferences in Home Production and Consumer Responses to Innovations By Ulrich Witt; Julia Sophie Woersdorfer
  8. Technology licensing by advertising supported media platforms: An application to internet search engines By Sapi, Geza; Suleymanova, Irina

  1. By: Duarte Leite (LIAAD – INESC, LA, Faculdade de Economia do Porto, Universidade do Porto); Pedro Campos (LIAAD – INESC, LA, Faculdade de Economia do Porto, Universidade do Porto); Isabel Mota (CEF.UP, Faculdade de Economia do Porto, Universidade do Porto)
    Abstract: In this study, we analyze firms’ membership in R&D (Research and Development) cooperation networks. Our main research hypothesis is that the membership in cooperation networks is related to the degree of the knowledge spillover. The approach focus on both cost symmetry and cost asymmetry. For that purpose, our work is developed in two tasks: we first develop an analytical model with three stages: in the first, firms decide whether to participate in a cooperative research network; in the second they simultaneously choose the level of R&D output, and finally firms choose the level of output through Cournot competition under both cost symmetry and cost asymmetry. Then we proceed with computational simulations in order to verify our hypothesis. From our results, we were able to conclude that cooperation leads to an improvement on RJV firms’ position in the market as it allows them to produce more than others with the same production conditions. Additionally, cooperating firms have to spend fewer resources on research, which turns the network a tremendous success on the productive efficiency level.
    Keywords: R&D, networks, spillover, simulation, RJV
    JEL: D85 L24 C63
    Date: 2011–07
  2. By: Lopes, Margarida
    Abstract: Abstract Labor market regulation and its relations with education and training have been performing an historical trajectory which closely intertwined with developments in economic thought. Under the form of human capital theories, neo-classical economics set the bridge between labor market equilibrium and education outputs for decades. The functionalist approach behind that lasting relationship was to be challenged by economic crises and globalization, which imposed the unquestionable supremacy of the demand for skilled work. Likewise, even if only that more strict perspective of education would prevail, which fortunately is not the case, time and hazard came to undertake its denigration on the grounds of a severe loss of regulatory efficiency as globalization was setting up. In this paper we shed light on the increasing role which innovation is called to perform in labor market hetero regulation in the present phase of globalization. Depending on the institutional design throughout which R&D become embedded in nowadays societies, evidence clearly reveals how innovation strategies are to be found so asymmetrically implemented between developed and developing countries, thereby leading to the enlarging divide between the “new North” and “new South” globalization off springs.
    Keywords: Key Words: labor market regulation; education and training; innovation; knowledge.
    JEL: J08 D84 A23 I21
    Date: 2011–05–07
  3. By: A. Naghavi; C. Strozzi
    Abstract: In this paper we study theoretically and empirically the role of the interaction between skilled migration and intellectual property rights (IPRs) protection in determining innovation in developing countries (South). We show that although emigration from the South may directly result in the well-known concept of brain drain, it also causes a brain gain effect, the extent of which depends on the level of IPRs protection in the sending country. We argue this to come from a diaspora channel through which the knowledge acquired by emigrants abroad can flow back to the South and enhance the skills of the remaining workers there. By increasing the size of the innovation sector and the skill-intensity of emigration, IPRs protection makes it more likely for diaspora gains to dominate, thus facilitating a potential net brain gain. Our main theoretical insights are then tested empirically using a panel dataset of emerging and developing countries. The findings reveal a positive correlation between emigration and innovation in the presence of strong IPRs protection.
    JEL: O34 F22 O33 J24 J61
    Date: 2011–07
  4. By: Abe Dunn (Bureau of Economic Analysis)
    Abstract: The pharmaceutical industry is characterized as having substantial investment in R&D and a large number of new product introductions, which poses special problems for price measurement caused by the quality of drug products changing over time. This paper applies recent demand estimation techniques to construct a constant- quality price index for anti-cholesterol drugs. Demand is estimated using a nationally representative sample of individuals over the period 1996 to 2007 that includes detailed information on individual health conditions, demographics, insurance, and prescription drug choices. Although the average price for anti-cholesterol drugs does not change over the sample period, I .nd that the constant-quality price index drops by 22 percent, a pace more in line with our expectations in such a dynamic segment of the industry. This result is robust to a number of alternative assumptions, highlighting the importance of controlling for quality in markets with signi.cant innovation. The demand estimates also reveal that the bene.ts from new innovations depend on the health conditions of individuals which may impact quality-adjusted prices for di¤erent populations.
    JEL: E60
    Date: 2010–10
  5. By: A. Naghavi; J. Spies; F. Toubal
    Abstract: In this paper, we propose the technological complexity of a product and the level of Intellectual Property Rights (IPRs) protection to be the co-determinants of the mode through which multinational firms purchase their goods. We study the choice between intra-firm trade and outsourcing given heterogeneity at the product- (complexity), firm- (productivity) and country- (IPRs) level. Our findings suggest that the above three dimensions of heterogeneity are crucial for complex goods, where firms face a trade-off between higher marginal costs in the case of trade with an affiliate and higher imitation risks in the case of sourcing from an independent supplier. We test these predictions by combining data from a French firm-level survey on the mode choice for each transaction with a newly developed complexity measure at the product-level. Our fractional logit estimations confirm the proposition that although firms are generally reluctant to source highly complex goods from outside the firm’s boundaries, they do so when a strong IPR regime in the host country guarantees the protection of their technology.
    JEL: F12 F23 O34
    Date: 2011–07
  6. By: Philip McCann (University of Groningen); Raquel Ortega-Argilés (Instituto Superior Técnico)
    Abstract: This paper examines the arguments underpinning the smart specialisation concept, an idea which originally emerged from the sectoral growth literature, and one which has recently been applied with to the regional policy context. The shift from a sectoral to a regional context appears prima facie to be quite straightforward but this paper explains that translating the idea to a regional policy context is rather more complex that it at first appears and implies some changes in both interpretation and implications. The outcomes of this are that in a regional policy setting the smart specialisation logic is seen to be broadly consistent with the overall reforms of EU Cohesion Policy. However, in a regional policy setting there is no reason why ICTs should be prioritised over many forms of intangible capital, and the promotion of technological diversification via entrepreneurship may need to be related to specific sectors or activities.
    Keywords: Smart, specialisation, EU, cohesion policy, innovation, sector, place-based
    JEL: O31 O33 R11 R58
    Date: 2011
  7. By: Ulrich Witt; Julia Sophie Woersdorfer
    Abstract: How can economic theory explain the reasons why consumers adopt innovations? Using the example of innovations in washing machines two approaches are compared. The first focuses in the manner of household production theory on changes in constraints without specifying preferences, leading to the well-known time substitution hypothesis. The second approach develops specific hypotheses about consumer preferences and focuses on how technical change accounts for them. The two approaches are empirically evaluated with a data set representing the motives suggested in washer advertisements for purchasing new vintages of machines over the period 1888 to 1989 in the U.S.
    Keywords: home production, preferences, consumer motivation, product innovation, innovation diffusion, time substitution hypothesis, direct utility Length 30 pages
    JEL: A12 D01 D11 D12 D13 N3
    Date: 2011–07
  8. By: Sapi, Geza; Suleymanova, Irina
    Abstract: We develop a duopoly model with advertising supported platforms and analyze incentives of a superior firm to license its advanced technologies to an inferior rival. We highlight the role of two technologies characteristic for media platforms: The technology to produce content and to place advertisements. Licensing incentives are driven solely by indirect network effects arising fromthe aversion of users to advertising. We establish a relationship between licensing incentives and the nature of technology, the decision variable on the advertiser side, and the structure of platforms' revenues. Only the technology to place advertisements is licensed. If users are charged for access, licensing incentives vanish. Licensing increases the advertising intensity, benefits advertisers and harms users. Our model provides a rationale for technology-based cooperations between competing platforms, such as the planned Yahoo-Google advertising agreement in 2008. --
    Keywords: Technology Licensing,Two-Sided Market,Advertising
    JEL: L13 L24 L86 M37
    Date: 2011

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